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Going Global- Chinese brands make steady progress overseas

Going Global: Chinese brands make steady progress overseas

But building awareness and Brand Power remain urgent challenges

Chinese brands continue to make steady progress in overseas expansion, but they need to address two urgent challenges, according to the third annual Chinese Global Brand Builders ranking, produced by BrandZ™ and Google. The challenges are:

Awareness Brand building begins with awareness. All Chinese brands competing outside of China, especially those that do not yet appear in the ranking, need to raise their level of awareness overseas. Greater awareness is best achieved by increased digital presence.

Brand Power Brand Power enables brands to enjoy sustained market share growth. Only brands with sufficient Brand Power scores appear in the ranking. And those brands need to strengthen their Brand Power by increasing their levels of Difference and Salience.

Brand Power is a BrandZ™ measurement of brand equity comprised of three components: Difference (being distinctive); Salience (coming to mind at the time of consideration); and Meaningfulness (filling needs in a relevant way).

The good news is that since the Chinese Global Brand Builders report launched in 2017, with 30 brands, the Top 30 have increased steadily in Brand Power, based on the appraisals of overseas consumers. In fact, year-on-year, Brand Power increased 15 percent for the 2019 Top 30.

Brands in the Top 30 experienced strong year-on-year Brand Power across categories, led by online fast fashion (not a category in the BrandZ™ China Top 100), home appliances, and e-commerce; and across countries, led by Japan, France, and Spain.

By raising their levels of Difference and Salience, brands already in the Chinese Global Brand Builders ranking can strengthen their Brand Power and narrow the Brand Power gap that separates them from the BrandZ™ Top 100 Most Valuable Global Brands.

Higher Brand Power depends on increased awareness. And, most troubling, awareness among overseas young people has declined significantly overall. In 2017, almost 20 percent of 18-to-34-year-olds were aware of Chinese brands. That proportion declined to less than 15 percent in 2019.

The awareness challenge is greatest for brands not yet in the ranking. Among overseas consumers of all ages, only 7 percent recognize these brands. Brands already in the ranking enjoy a much higher 22 percent level or awareness, but it has not increased over the past three years.

Digital presence is the key to increasing awareness. Over the past three years, Chinese Global Brand Builders increased 14 percent in the Google search index and 16 percent in the YouTube search index. In contrast, brands not in the Chinese Global Brand Builders ranking declined 21 percent in the Google search index and 24 percent in the You Tube Index.

These summary conclusions emerge from the BrandZ™-Google analysis:

Building greater overseas awareness of Chinese brands is critical.

Awareness leads to Brand Power, which varies in strength by category and country,

Strengthening Brand Power requires investment in building Difference and Salience.

To be more effective, Difference and Salience needs to be amplified by digital presence.